Policy Priorities: Top 2016 Multifamily Agenda

The nation’s largest housing organizations are unceasing in their efforts to ensure legislative and regulatory actions advance the interest of the multifamily sector. The coming year will see them participating in numerous key debates on issues of concern to multifamily housing developers, owners and operators. Those issues range from ongoing tax reform and the future of government-sponsored enterprises to workforce advancement and the funding of affordable housing.

Here are the key policy priorities drawing the attention of the National Multifamily Housing Council (NMHC), National Leased Housing Association (NLHA) and National Association of Home Builders (NAHB) as we enter the crucial election year of 2016.

National Multifamily Housing Council
The Washington, D.C.-based NMHC continues to resolutely focus lobbying efforts on housing reform.  NMHC Senior Vice President, government affairs Cindy Chetti said interest in housing reform may be renewed on Capitol Hill. “We will watch closely to make sure Congress understands that the multifamily industry is very much different from the single-family housing industry, and that any initiatives in housing reform will have to address the multifamily industry,” she reported.

Tax reform is another issue of concern to the NMHC. Congress needs to be kept aware that flow-through partnership structures are key to the multifamily industry because that’s how many of the industry’s businesses are structured, Chetti said. “That provides flexibility in structuring our operations,” she added. “We would support a reduction in the corporate tax rate, but we want to make sure that that reduction is not paid for by the individual.”

The NMHC also is striving to make sure that lawmakers’ push for a simplified tax code doesn’t jeopardize the low-income housing tax credit, which is a primary financing incentive spurring low-income housing development. The regulatory environment is a critical issue to the organization as well, Chetti said. The Waters of the U.S. (WOTUS) rule tops the list of NMHC’s concerns.

This rule would expand the scope of the federal government control over U.S. waters, which have traditionally been overseen by states and localities. “This puts federal legislation on top of that, which could lead to increased development time and permitting time, which in turn could lead to additional cost,” she added. “So we’ve been very active on the WOTUS rule.”

The NMHC has also been involved recently in the cyber security, data breach and telecom debates. Multifamily residents have never been more interested in connectivity, Chetti points out. With Congress examining the Telecom Act and net neutrality, the organization has been highly attentive to any congressional action that might be imminent on telecom and technology issues.
NMHC is invariably a key participant in the nation’s energy debate. The Council works to ensure federal energy policy limits the use of building codes and mandates to drive energy improvements, supports energy-efficiency tax incentives and reinvests in the Energy Star program, Chetti reported.

“We’re very supportive of energy incentives that help our members build green,” she said.
“We’ve been involved in the energy bill moving through Congress in the past year, and watchful about ensuring the way the bills go forward, and that they focus on energy incentives, rather than energy mandates.”

National Leased Housing Association
The Washington, D.C.-based NLHA, which serves both public and private organizations in the affordable multifamily rental field, identifies funding as its number one issue. Denise B. Muha, the group’s executive director, said, “It is becoming more and more difficult to be assured there is sufficient funding, particularly in the Section 8 realm. That’s because those folks are receiving subsidies directly from the federal government.”

For some time, the NLHA has worked toward a goal of regulatory relief for a number of housing programs. In the Section 8 housing program, for instance, rules often are self-defeating, Muha reported. The funds of housing authorities in particular have been consistently cut over the past several years. Yet housing authorities have been asked to file greater amounts of paperwork, she noted.

“In the voucher program, every time a voucher holder is going to lease up a unit, it has to be inspected by the housing authority,” Muha said. “But there’s no recognition of previous inspections. If the authority has to come in and inspect one unit, it has to be open for a week or 10 days, and those are 10 days it could be rented by a market-rate tenant.” She added, “So there is a disincentive for professional landlords to rent to voucher holders if it means they can’t turn their units over as often as in the market-rate market.”

A bill introduced last year, HR 3700, The Housing Opportunity Through Modernization Act of 2015, would permit a resident to move in on the basis of a previous inspection, and allow for the inspection to be conducted at any time in the ensuing 30 days. The NLHA supports the goals of this bill. The NLHA has worked for a number of years on a bill called HR 2482, The Preservation Enhancement and Savings Opportunity Act of 2014, concerning housing projects that have gone through the Low Income Housing Preservation and Resident Ownership Act
(LIHPRHA) program, Muha said.

In the 1990s, HUD restructured some mortgages under LIHPRHA, imposing a fixed maximum amount on annual cash distributions to equity owners of properties. Workable 20 years ago, the restrictions now impose adverse consequences that relate to the federal income tax liabilities of the owners. Bill 2482 would remove these contractual limitations, accelerating owners’ access to their own funds, while ensuring long-term affordability and compliance with HUD standards. “It passed the House and we’re trying to get it passed in the Senate,” Muha reported. “But the House also included it in the Transportation Bill that has been sent back over to the Senate. It could pass on its own or as part of the Transportation Bill.”

Another issue being examined by the association concerns a comparatively new initiative called the Rental Assistance Demonstration, or RAD, program. The program allows public housing agencies to choose to convert their public housing to either Section 8 project vouchers or project-based rental assistance. RAD is capped at 185,000 units nationwide. Muha reports her association would like to see the cap increased or removed entirely to provide greater opportunities for housing authorities to undertake these conversions, where feasible.

A second part of RAD called Rental Assistance Payments (RAP) permits the conversion of older subsidy contracts on privately owned housing. “Those have the ability to be converted to project-based rentals or project-based vouchers,” Muha said. “Congress removed the cap in that program last year. But issues surrounding the program need to be tweaked.”

National Association of Home Builders
At Washington, D.C.-based National Association of Home Builders (NAHB), the number one priority is the 2016 presidential election. “For us, it’s focusing our membership on the best candidate to represent housing, and making sure housing is talked about on the campaign trail,” said Jim Tobin, NAHB executive vice president for government affairs and communications. “We want to see candidates talking about the opportunities housing presents to the economy, to the mobility of Americans and to pocketbook issues, while on the campaign trail.”

In terms of policy issues, the major concerns remain the same, Tobin noted. From NAHB’s perspective, it was good news that Congress and the White House forged an agreement on a two-year budget. Given the two-year budget cycle, Tobin said, “I think next year’s budget process will be much smoother than it has been. We can work on some programmatic choices and make sure they’re funded through the next two years.”

Another NAHB concern is the availability of labor, which is a major issue in the housing industry. NAHB supports workforce development, as well as efforts to spur young people to pursue home-building careers. Immigrant workers assume key roles in meeting the country’s housing needs, so according to Tobin, NAHB backs effective reforms to the nation’s immigration system.

NAHB supports immigration reform that protects the nation’s borders; ensures employers be responsible only for verifying the identity and work authorization of their direct employees and not their subcontractors’ employees; creates an efficient temporary guest worker program for the construction industry; and addresses the status of the current undocumented immigrant population.

The organization also continues to push progressively for the reform of Fannie Mae and Freddie Mac, which are now in the eighth year of conservatorship. “That has affected financing on both the single-family and multifamily housing side,” Tobin said. ”We continue to think Congress has to act in this phase. Absent that, the FHA will continue to do housing reform through regulatory action. We would rather Congress do that, than seeing it done regulatorily.”

Tobin added that NAHB continues to battle the regulatory environment imposed by the current presidential administration, WOTUS being of greatest concern. “Driving up costs of multifamily development will only exacerbate the affordability crisis,” he said.